Abstract
Abstract
Business-to-business firms know that being able to obtain a higher price than competitors and to keep customers happy they must deliver something the customer perceives as value. To support customers to be able and willing to pay this value, a customized, quantified business case needs to be developed to allow the customer to see the payback for whatever investment is being requested versus other alternatives. A previous methodology to do this was to look at the total cost of ownership (TCO) of the proposed purchase over its life. However, too often, TCO became the total cost of acquisition by procurement people (missing the installation, operational and disposal phases, which is often 8 times more important than the landed cost). The next evolution is to look at a more holistic measurement of value that takes into account not only cost savings but all improvements, such as risk reductions, increased revenue and customer satisfaction. Only then can buyers and sellers make decisions on who is creating the best value and what someone should be willing to pay for it. Anyone who can demonstrate and document the greatest value surplus is the one delivering the best value.
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